News and commentary about road pricing across the globe. Tolls, congestion charging, distance based charging, road user charging. Public policy, economics, technology and more. If Google brought you here, look down the right sidebar for references.

Friday, 10 August 2012

Auckland Mayor keeps pushing road pricing, but Government opposed

As I reported previously, Mayor of Auckland (New Zealand) Len Brown (centre-left) has been looking for ways of raising revenue to pay for major transport infrastructure projects, most particularly the idea of an underground rail loop under the central city. Auckland's passenger rail system, long neglected, has had well over NZ$1 billion spent on it for track and signal improvements, new stations, and soon to be installed electrification with new trains, but as routes terminate at a downtown underground terminal the idea is that there will be more patronage if over NZ$2 billion more is spent on extending lines underground to connect to the western line.

The problem Brown has is money. Auckland Council's sole core source of revenue raising is rates - a tax on the value of land and buildings. He can't get political support to raise such taxes sufficiently to pay for it. Nor is the central government transport funding agency - the New Zealand Transport Agency - keen to pay for all of it (it typically will fund up to 60% of the cost of economically efficient public transport improvements, with most of its revenue coming from hypothecated motoring taxes on fuel, distance/weight and vehicle ownership), so Brown is looking for new ways to raise revenue.

Transport Minister, Gerry Brownlee (of the Centre-right National Party) has said no. The reasons given are that congestion pricing is typically done overseas to reduce congestion not raise revenue (which is true, but it is acknowledged that the latter is always a secondary effect), and that it is unreasonable for Auckland Council to collect revenue from tolling roads which it doesn't control - namely the State Highways (Auckland's motorways).

It does raise the issue as to whether congestion charging would be ok if it was to reduce other taxes (which it could do, by reducing or even eliminating ratepayer funding of local roads in Auckland), but nobody is arguing for that.

The obvious retort would be to design a congestion charging scheme for Auckland, targeted at congestion, on Auckland Council's roads (not charging the motorways). The problem is, as I've written before, that congestion in Auckland is not nicely confined to the central business district (which would invite a cordon pricing scheme). Indeed, traffic isn't that bad there at all. Congestion is spread out, at a wide range of bottlenecks and corridors, and Auckland has a wide range of alternative routes that are used to "rat run" pass such bottlenecks. To do effective congestion pricing on that scale would require some form of distance charging with GNSS technologies, such as that already used voluntarily as a option to pay New Zealand's nationwide weight /distance Road User Charge for heavy and diesel vehicles.

In other words, true congestion pricing for Auckland is complex and wont be achieved through a London/Stockholm style scheme.

For revenue raising of course, the issue of where congestion is becomes irrelevant. A better consideration is equity, so that those who pay are those who benefit from the revenue spent or who could benefit.

This is where two options come to the fore.

One is a downtown central city cordon.

Auckland congestion charge inner city cordon concept

That's attractive if only because the underground rail link project is focused on this area and conceptually it can be argued that those still driving to the central city could instead use the railway. Yet it is unlikely to raise enough revenue, and also seriously challenges the claims of the rail project advocates by creating a gamble over the attractiveness of downtown Auckland. If the underground rail link is a good idea (and opinions on this are diverse), then a central city cordon pricing scheme will not be a problem, as the rail link will attract many motorists, along with improved buses (with less congestion) so that the city is a more pleasant place to do business with less traffic and a high standard of public transport accessibility. Yet if the rail link does not deliver, introducing a cordon pricing scheme could make downtown Auckland significantly less attractive for some businesses, which could readily shift to one of Auckland three other urban centres, or out of New Zealand altogether, on the basis that the rail project isn't a good enough alternative for enough commuters (given the railway doesn't serve the North Shore or the central isthmus, this is a risk, although both of those areas are very well served by buses).

A Mayor willing to gamble on this would be brave indeed, although if he is convinced of the business case of the rail project, then he should support this on the basis that the businesses that will benefit the most from the rail project will be paying for it through road access to their premises. Yet I doubt he will do this, for the same real underlying reason Central Government is opposed to it:

Politics.

The Mayor is advocating tolls on State Highways because they will generate more revenue (far more traffic than a cordon would charge), appear to have an alternative (other roads) and because he would have to get Central Government support.

However, it would appear that the centre-right National led coalition government regards tolling on existing roads to be politically too risky. The Opposition Labour Party is against it (although it commissioned studies into it whilst in power) claiming it would hurt the poor, yet it advocates a regional fuel tax that would mean all motorists in Auckland, on all roads at all times would pay, instead of just peak commuters on motorways. The equity concerns around raising fuel taxes seem to be more easily evaded than tolling.

Is public support being underplayed?

Construction sector lobby group the New Zealand Council for Infrastructure Development released a survey result claiming that a majority of Aucklanders would support road pricing (in the form of low tolls on existing motorways in Auckland) if it reduced congestion and funded major improvements. Its poll said 46% would support a NZ$2 (US$1.64) charge on all access to Auckland's motorways, although 33.4% opposed it.

The difficulty is that a previous study indicated that tolling just the motorways (which is, on the face of it, attractive because it is technically easy to do, and Auckland's motorways comprise three major radial routes to the north, south and west which are significantly superior to parallel routes) would result in worsened congestion because of diversion of a lot of short trips onto local roads.

Of course the biggest problem with any broad brush surveys or studies is that it doesn't have the level of granularity required (or feasible) to address such problems. For example, it would be easy to reintroduce tolls on Auckland Harbour Bridge, as the alternative route is lengthy, but tolling a short stretch of motorway where the parallel local route is already congested is likely to be problematic.

The obvious solution would be to selectively toll on ramps where there is less likely to be diversion, but that will raise a whole host of concerns of discrimination against certain suburbs.

Conclusion

Auckland wont get road pricing on existing roads in the near future. The current government is uninterested in taking such a step for fear of it costing it politically, particularly when it is not politically aligned to the Auckland Mayor, nor supportive of his totemic underground rail link project. Conversely, it is embarking on a massive road building programme that includes completion of a major southwestern motorway route in Auckland, and other large motorway projects in or approaching major cities, funded from existing motoring taxes. It is two years till the next General Election, and even if the government changed, the Labour Party's opposition to congestion charging doesn't bode well for its future in Auckland for now - a more likely outcome is that transport funding would shift towards public transport away from large motorway projects, but still be funded from existing motoring taxes.

Regardless of that, neither the new motorway nor rail improvements will make a significant difference to congestion in Auckland in the long run - that will require pricing. The problem is that the level of debate and discourse about road pricing in this context remains basic. As I said before, the lowest risk platform to advance road pricing in New Zealand is its existing weight/distance based road user charge that applies to heavy vehicles and diesel vehicles. A long term strategy to replace fuel tax with that system for all vehicles would deliver a platform that could allow Auckland's roads to be priced effectively and efficiently.

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What is road pricing?

Road pricing is any system that directly charges motorists for the use of a road or network of roads. Traditionally it has meant tolls on single routes, particularly crossings such as bridges or tunnels. More recently it also includes area, cordon and zone pricing of urban areas, and distance and time based charging of whole networks. It does not include fuel or tyre taxes, or taxes on ownership or purchase of road vehicles.